PEACE

The economic impact of violence includes the following
components:
• Direct costs are the cost of violence to the victim,
the perpetrator and the government. These include
direct expenditure such as the cost of policing.
• Indirect costs accrue after the violent event and
include indirect economic losses, physical and
physiological trauma to the victim as well as the
lost productivity.
• The multiplier represents the flow-on effects of
direct costs, such as additional economic benefits
that would come from investment in business
development or education instead of containing or
dealing with violence. Box 3 in Annex A provides a
detailed explanation of the peace multiplier used.
The model outputs a conservative estimate of the global
impact of violence as it only includes variables of violence
for which reliable data could be obtained. The following
indicators are therefore not counted in the economic
impact of violence:
• domestic violence
• household out-of-pocket spending on safety and security
• the cost of crime to business
• spill-over effects from conflict and violence
• self-directed violence
• the cost of intelligence agencies.
TEN COUNTRIES MOST AND LEAST
ECONOMICALLY IMPACTED BY VIOLENCE
& CONFLICT
The economic impact of violence for the ten most affected
countries is equivalent to more than 25 per cent of their
GDP. All of these countries have either high levels of
internal conflict or high levels of interpersonal violence.
The conflict affected countries mainly suffer from high
consequential costs such as deaths and injuries from
conflict or terrorism, higher population displacement, and
GDP losses. Countries with higher interpersonal violence
are affected by higher costs of homicides, violent and
sexual assault and higher levels of fear of victimisation.
Figure 5 highlights the ten countries whose economic
impact of violence relative to the size of their economy is
the highest in the world. Of these ten, five are suffering
from armed conflict. They are Syria, Iraq, Afghanistan,
South Sudan and the Central African Republic. The other
countries have very high levels of interpersonal violence,
with the exception of North Korea which is a highly
militarised country. Syria has the highest proportion of its
GDP related to violence containment expenditure at 54
per cent.
FIGURE 5
TEN COUNTRIES WITH HIGHEST ECONOMIC IMPACT OF VIOLENCE AS PERCENTAGE OF GDP
While five of the ten most impacted countries are experiencing armed conflict, four of the ten
are experiencing significant levels of interpersonal violence and organised crime.
ECONOMIC IMPACT OF VIOLENCE, % OF GDP
60%
50%
40%
30%
20%
10%
0%
Syria Iraq Afghanistan Venezuela South
Sudan
Honduras Colombia Central
African
Republic
North Korea
Lesotho
Source: IEP
THE ECONOMIC VALUE OF PEACE 2016 | Results & Trends 12